The Effect of Ethnic Diversity on Municipal Spending

Jannett Highfill () and Kevin O’Brien ()

Atlantic Economic Journal, 2015, vol. 43, issue 3, 305-318

Abstract: This paper examines the effect of ethnic diversity on municipal spending, taxes, and employment, as well as on municipal spending in various subcategories. Previous work has found that diversity is associated with decreased productive spending but increased overall spending and employment. The goal of this paper is to investigate whether these opposing effects are found for two different levels of diversity. The first considers broad ethnic groups like non-Hispanic white, black, and Hispanic. The second considers more focused diversity, the various subgroups making up the white category. We find that greater broad diversity increases municipal spending and taxes, spending on all of the specific productive goods, and sometimes on protective or redistributive services. Greater focused diversity, on the other hand, decreases municipal spending and spending on one redistributive service but increases spending on another. Copyright International Atlantic Economic Society 2015

Keywords: R1; J15; H7; R5; Ethnic heterogeneity; Diversity; Municipal government; Productive government spending; Redistributive government spending (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:kap:atlecj:v:43:y:2015:i:3:p:305-318

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DOI: 10.1007/s11293-015-9469-z

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